Bidding versus Negotiated Contract

Bidding and negotiated contracts each have their benefits and we’re comfortable with either approach. We simply ask, that from the outset, we have a clear understanding of which path you’d like to take.

 

Bidding

Bidding follows a traditional and straightforward approach to reaching contract pricing and we gladly bid against other general contractors. All we need are detailed plans that should include window and door specifications, an electrical plan, details about finishes, and any engineered drawings where applicable. When the plans include these details, they typically have everything else we need for accurate contract pricing.

The obvious benefit of bidding is that you’ll have comparative quotes from competing firms typically within two or three weeks. As long as the specifications are clear and complete, you’ll have the basis for a good comparison among bidders. From our experience, the main drawbacks are that design can often get ahead of pricing with bids coming in over budget and that value engineering opportunities, through plan review by the general contractor and sub-contractors are usually missed. If you or your architect has a good grasp of construction costs, bidding is a good way to go. For more on the Bidding process, please click here.

Bidding-If you or your architect has a good grasp of construction costs, bidding is a good way to go.

Negotiated Contract

If you’re early in the process, you may want to consider a negotiated contract in which the general contractor is selected during the design phase. Together, the owner, architect, and general contractor work as a team to develop the project and since the general contractor is involved earlier on, pricing and value engineering are available each step of the way which is particularly useful to owners who are trying to balance design within an established budget. Our Negotiated Contract process typically takes months rather than weeks, has two clear steps, and is intended to keep design from getting too far ahead of budget. For more information on Negotiated Contracts, please click here.

Negotiated Contract- Our Negotiated Contract process typically takes months rather than weeks, has two clear steps, and is intended to keep design from getting too far ahead of budget.

Negotiated Contract Step 1 – Preliminary Pricing and Letter of Intent

We take the initial Concept Drawings or Schematic Designs from your architect and come up with preliminary pricing based on a combination of unit pricing, allowances, comps to past projects and, where the drawings provide enough detail, hard quotes from subcontractors and suppliers.  We’ll present you with a cost range, a rough schedule, and all our underlying assumptions including any quotes we’ve received. Here’s where you’ll start to see the transparency into pricing that defines our work in general but that is particularly critical to developing a project through a Negotiated Contract. With your acceptance of this round of pricing, we ask to sign a Letter of Intent to work together and request a deposit that is applied to the first contract payment. The Letter of Intent along with the deposit will hold a place in our schedule and gives us the go ahead to work with you and your architect to develop the plans into final construction drawings.  This first step typically takes one to two weeks.

Negotiated Contract Step 2 – Revised Pricing and Contract

With more fully detailed Design Development drawings we continue to build and refine the estimate looking at options for everything from windows and siding to heating and cooling. At this point in the process we’re now collaborators and draw on decades of construction experience and our stable of subcontractors and suppliers to explore design options and value engineering opportunities. At various points we’ll check in with increasingly detailed revised pricing broken down into 25 construction categories. Our ultimate aim is to get to the fixed price cost for the scope of work outlined in the final construction drawings and specifications. This price will not be exceeded unless you approve work outside of the scope of the contract. At contract signing we will apply your deposit to the first scheduled payment. Depending on the size and complexity of the project this second step can take from several weeks to several months.

Through the Negotiated Contract process we help to value engineer the project and are included in a way that promotes a partnership and continuity that leads to the best possible project. If you’re looking for input from a qualified general contractor who is also a partner in the design intent or are unsure of construction costs, a Negotiated Contract is a good way to go.  For more on the Negotiated Contract process, please click here.